Tuesday, 6 October 2015

The Trade Negotiation Game

Tim Groser announcing the TPP deal:
At the end of the day the trade negotiation game isn't that sophisticated. You negotiate as well as you can with whatever weapons you've got - political, logic, whatever - and when you sense the bus is going to take off you jump on board. It's as simple as that.
I hope this quote ends up on a game theory exam for some economics students this year with the question being: if you were negotiating against this guy, what probability would you assign to him walking away from any deal?

The easy answer is that in all future trade negotiations he will sign anything and will never walk away. So cheers for that Tim.

Things are slightly more tricky as regards this particular deal though, because he only announced this cunning plan after it was all over. But a rational negotiator would still be highly confident he'd sign anything, partly because he has never once publicly contemplated walking away, but also because as the closing stages arrived Tim's boss procured from Helen Clark a public endorsement of an almost identical negotiating position.

Conclusion: it was ever thus. Once you hook NZ into the room, we'll sign any old deal that pops out.

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